Encana natural gas well burst kills one, injures three in Colorado

CALGARY — One person is dead and three others have been injured following a burst of high pressure natural gas at an Encana Corp. well site in eastern Colorado.

The rare and tragic incident, which occurred at a recently completed site northeast of Denver at approximately 1 p.m. MT on Wednesday, comes at a particularly bad time for Canada’s largest natural gas producer. Calgary-based Encana has been under fire since June for allegedly colluding with Chesapeake Energy Corp., its main rival in the United States, to drive down the price of land in Michigan.

Before those allegations were made public, Encana had already spent much of the year fighting record-low North American natural gas prices. Those continuing low prices have reduced the company’s total market value by more than 10% over the past 12 months and have led many in the analyst community to name Encana as the industry’s most likely takeover candidate.

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Doug Hock, a Denver-based spokesperson for Encana, said the deceased was a 60-year-old contractor employed by Castle Rock, Colo.-based BGH Gas Test Operating Inc. Two of the three people injured are employed by that same company, he said, while the third works directly for Encana.

The injured were taken to the Northern Colorado Medical Centre for treatment and Mr. Hock said all three have since been released.

“While we believe the incident to be the result of a high-pressure gas release, the exact cause is not known at this time,” Encana said in a statement released Thursday afternoon.

“Our thoughts and prayers are with the family and friends of our fallen colleague and anyone impacted by this tragedy.”

Workers were in the process of transitioning three recently drilled horizontal wells from an active operations phase to a final production phase when the accident occurred. The statement said this was the first fatality related to Encana’s operations in Colorado’s Denver-Julesburg Basin and only the second time since 2002 that a member of staff sustained a lost workday injury.

Deaths related to natural gas liquids extraction are extremely rare. Between 2003 and 2010, the most recent year for which data were available, the U.S. Bureau of Labour Statistics recorded a total of only three fatalities related to the process across the United States.

For the same period, the agency recorded a total of 145 deaths related to all oil and gas production in the country.

No Encana employees have lost their lives on the job since 2009, according to the company’s 2011 corporate responsibility report. Two contractors and one Encana employee were killed while working for the company that year.

Another Denver-based spokesperson for Encana told Reuters the accident was not related to the controversial hydraulic fracturing technology more commonly known as fracking. Encana usually employs fracking in its horizontal wells, though the spokesperson said “that part of the operation had already been completed” before the production phase began.

The U.S. Occupational Safety and Health Administration has jurisdiction over incidents of this nature. Todd Flick, a Denver-based safety and health inspector for the federal agency, confirmed OSHA is working with Encana to determine the cause of the accident, noting an investigation of this nature could take a maximum of six months to complete.

“With inspections of this magnitude, we are there to get the facts and do the best we can so we definitely don’t rush through them, but there is a time limit of six months,” he said, adding “just because we open an inspection doesn’t mean the companies were doing anything wrong.”

In addition to the government-led investigation, Encana said it would be conducting a separate internal investigation “so that we might learn what occurred and what steps we might take to help prevent any future incidents of this nature.”

It is the second time in as many months Encana has felt it necessary to review its own corporate practices. In late June, the company’s board of directors ordered an internal investigation of leaked emails suggesting top Encana executives had been conspiring with their counterparts at Oklahoma-based Chesapeake to avoid bidding against each other during a 2010 state-run land auction.

Last week, Chesapeake disclosed it had become the subject of a criminal anti-trust investigation by the U.S. Justice Department related to its alleged collusion with Encana. The Canadian company is also believed to be subject to the same investigation.

Encana’s management refused to answer questions on the progress of its investigation during a July 25 second-quarter earnings call, when the company reported a US$1.5-billion net loss largely due to the rapid decline of natural gas prices over the past year. Those prices are expected to remain mired near 10-year lows at least until early next year.

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